-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KynA1zcZMzGS/ci6UCKOUNEg4y38qenXTKJURJARt/ACtlQPNpcDw781lBo1lPvS tKgY1kp27Y886vZpcKHN9w== /in/edgar/work/20000802/0000912057-00-034319/0000912057-00-034319.txt : 20000921 0000912057-00-034319.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-034319 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000603 FILED AS OF DATE: 20000802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREO PRODUCTS INC CENTRAL INDEX KEY: 0001058664 STANDARD INDUSTRIAL CLASSIFICATION: [3555 ] IRS NUMBER: 000000000 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 6-K SEC ACT: SEC FILE NUMBER: 000-26571 FILM NUMBER: 684664 BUSINESS ADDRESS: STREET 1: 3700 GILMORE WAY STREET 2: BURNABY BRITISH COLOMBIA V5G 4MI CANADA BUSINESS PHONE: 6044512700 MAIL ADDRESS: STREET 1: 3700 GILMORE WAY STREET 2: BURNABY BRITISH COLOMBIA V5G4MI CANDA 6-K 1 a6-k.txt 6-K [LETTERHEAD] FOR IMMEDIATE RELEASE CREO PRODUCTS INC. ANNOUNCES 2000 THIRD QUARTER: RECORD REVENUE OF $162.6 MILLION AND ADJUSTED EARNINGS* OF $13.7 MILLION OR $0.28 PER SHARE (In thousands of U.S. dollars except earnings per share) Vancouver, BC, Canada (August 1, 2000) Creo Products Inc. (NASDAQ - CREO, TSE - CRE) (`Creo') reported adjusted earnings for the three months ended June 30, 2000 of $13.7 million or $0.28 per share (diluted - US GAAP) compared to $4.7 million or $0.16 per share for the three months ended June 30, 1999. *The adjusted earnings excludes the effect of goodwill and other intangible asset amortization, business integration costs and the equity loss from the investment in Japan. The adjusted earnings is not prepared in accordance with generally accepted accounting principles (GAAP) because it excludes these costs. Total revenue for the three months ended June 30, 2000 (Q3) increased 266.8% to $162.6 million from $44.3 million for the three months ended June 30, 1999. Total revenue for the nine months ended June 30, 2000 increased 128.8% to $280.0 million from $122.4 million for the nine months ended June 30, 1999. "We are very pleased with these operating results," said Raffi Amit, Co-Chair of the Board of Creo. "This has been a remarkable accomplishment in light of challenges the company faced in integrating these two business. Our shareholders are beginning to realize the benefit from this merger." On April 4, 2000, Creo acquired certain assets of Scitex Graphic Business and shares of related subsidiaries for 13,250,000 shares of Creo. This acquisition was valued at $508.0 million, which has been allocated to the assets and liabilities acquired along with the related goodwill from the acquisition. The acquisition was accounted for under the purchase method, with the results from the operations of the Business acquired being included in the consolidated financial statements of Creo commencing this quarter. "The acquisition of the Scitex pre-print operations was an important move for us" said Amos Michelson, CEO of Creo. "Going forward we have broadened our product offering and our sales distribution throughout the world and with our merged innovative team, we have positioned ourselves for strong long-term growth." This is the first quarter that the Company's financial results include the pre-print division of Scitex Corporation Ltd. acquired on April 4, 2000. The following comparison is based on the results for the three months ended June 30, 2000 compared to the pro forma consolidation of the actual results of Creo and the Scitex pre-print division for the quarter ended March 31, 2000. The Scitex pre-print division results are extracted from Scitex Corporation's financial statements for the quarter ended March 31, 2000. The Statement of Operations this quarter includes business integration costs of $8.2 million, goodwill and other intangible asset amortization of $18.1 million, and the equity loss from the investment in Japan of $1.0 million. The following is a pro forma summary of adjusted operations and earnings excluding these items and has been prepared assuming the merger took place effective January 1, 2000 (in millions of U.S. dollars):
Three months ended June 30 March 31 2000 2000 (unaudited) (unaudited) ------------------------------------------------------------------------------------------------------------ Revenue $ 162.6 $ 169.8 Cost of sales 91.1 96.8 ---------------- ---------------- Gross profit 71.5 73.0 Research and development, net 14.2 19.0 Sales and marketing 24.7 24.5 General and administration 17.2 16.7 Other (income) expense 0.1 (1.7) ---------------- ---------------- Adjusted operating income 15.3 14.5 Income tax expense (3.8) (4.8) ---------------- ---------------- Adjusted net operating income 11.5 9.7 Cash tax recovery from the amortization of intellectual property 2.2 2.2 ---------------- ---------------- Adjusted earnings $ 13.7 $ 11.9 ================ ================ Adjusted earnings per share - fully diluted under Canadian and US GAAP $ 0.28 ===============
Effective May 18, 2000, the joint venture between Heidelberg and Creo was terminated, and the companies entered into an original equipment manufacture (OEM) relationship on those products that were formerly in the joint venture. Under this OEM relationship, Heidelberg has the right to continue to manufacture and sell these products for at least the next two years. Under our agreement on the termination of the joint venture, all equipment orders that were received up to May 17, 2000 were considered joint venture business and will be accounted for as the joint venture revenue when shipped. All orders received after May 17, 2000 by Heidelberg will be accounted for as OEM sales, whereby the company will record the full amount of the sale to Heidelberg. Under this OEM relationship, Heidelberg will no longer continue to fund R&D expenses on these products. During Q3, all the shipments of these products were joint venture sales, since all the orders were received prior to May 18, 2000. If these joint venture shipments had been accounted for as OEM sales, the revenue of the company would have increased by $11.5 million, offset by increased cost of sales of $5.2 and a reduction in R&D funding of $0.4 million resulting in a net increase in operating income of $5.9 million. Total revenue for Q3 decreased $7.2 million to $162.6 million from $169.8 million for the three months ended March 31, 2000 (Q2). This was mainly due to a decrease in equipment revenue from the joint venture with Heidelberg of $11.9 million offset by an increase in the non-joint venture products of $4.7 million. Although the revenue from the joint venture in Q3 was low, we are entering our fourth quarter with a record level of sales backlog for these products. The following is a summary of our revenue for Q2 and Q3 (in thousands of US dollars):
Three months ended June 30 March 31 2000 2000 (unaudited) (unaudited) - ------------------------------------------------------------------------------------------------------------ Joint Venture $ 14,131 $ 26,023 Output division - includes computer to plate (CTP) and computer to film 47,275 40,054 Workflow - Brisque and Prinergy software 25,758 23,759 Input division - scanners and digital cameras 10,217 12,586 Iris division - proofers 6,294 8,503 OEM revenue - includes DOP and print on demand systems 11,663 12,605 Consumables on proofers 11,193 11,760 Service 36,043 34,497 ---------------- ---------------- $ 162,574 $ 169,787 ================ ================
The gross margin in Q3 increased to 44% from 43% in Q2, due to our product mix this quarter. In Q3 we sold more large format CTP's and workflow systems as compared to Q2. The gross profit in Q3 decreased $1.5 million from that of Q2 due to a decrease in overall revenue. Research and development expenses decreased $4.8 million from $19.0 million in Q2 to $14.2 million in Q3. This decrease was due mainly to a $2.5 million increase in research and development tax credits resulting from new tax legislation in Canada and a $1.6 million decrease in R&D expenses in Israel. Sales and marketing expenses increased $0.2 million from $24.5 million in Q2 to $24.7 million in Q3, due to the increase in sales levels of the non-joint venture products. General and administration expenses increased by $0.5 million from $16.7 million in Q2 to $17.2 million in Q3. This increase was due mainly to an increase in legal and audit fees. Income tax expense as a percentage of pre-tax income decreased from 33% in Q2 to $25% in Q3. This decrease was a result of the operating structure on the acquisition from Scitex , which resulted in more of our operations being taxed in jurisdictions with lower tax rates. The cash tax recovery from the amortization of intellectual property is the benefit the company will receive for the next five years as a result of the Scitex acquisition. This intellectual property was acquired through the issue of shares and therefore did not involve cash, but these tax savings result in an actual cash tax savings to the company. The business integration expenses consist mainly of expenses that are related to integration of the Scitex business, including closing of offices and the termination of the joint venture with Heidelberg. Management anticipates additional integration expenses in the future as decisions are made on products, computer systems and certain other activities that are necessary to integrate the business. The preliminary amounts assigned to goodwill and other intangible assets on the acquisition of the Scitex pre-print division, Intense Software Inc. and Carmel Graphics Systems Inc. totals $383.7 million. Under Canadian GAAP, this amount is amortized over five years. Under U.S. GAAP, the in-process R&D is expensed immediately and the residual amount is amortized over five years. In July 2000, we increased our ownership of Nihon CreoScitex of Japan to 51% and we will consolidate this company starting in the quarter ending September 30, 2000. In October 2000, we plan to increase our ownership to 81% and take over operating control of this company. As at June 30, 2000, the company had 46,969,587 common shares outstanding and 6,341,661 options outstanding. The share capital used for the June 30, 2000 earnings per share calculations are as follows:
Per Pro Forma Per Consolidated Statement Summary of Adjusted of Operations Operations Three months ended Nine months ended Three months ended JUNE 30 JUNE 30 June 30 2000 2000 2000 (unaudited) (unaudited) (unaudited) - ------------------------------------------------------------------------------------------------------------------- Basic shares outstanding 45,948,027 37,010,710 45,948,027 Fully diluted - Canadian GAAP Net earnings (loss) / Adjusted earnings $ (10,211,000) $ 2,145,000 $ 13,715,000 Plus: income from options - 3,000 906,000 -------------------- ------------------- -------------------- $ (10,211,000) $ 2,148,000 $ 14,621,000 ==================== =================== ==================== Basic shares outstanding 45,948,027 37,010,710 45,948,027 Plus: dilutive options - 48,000 6,364,555 -------------------- ------------------- -------------------- Fully diluted shares outstanding 45,948,027 37,058,710 52,312,582 ==================== =================== ==================== Fully diluted EPS $ (0.22) $ 0.06 $ 0.28 ==================== =================== ==================== Diluted - US GAAP Net loss / Adjusted earnings (48,401,000) (36,045,000) 13,715,000 Basic shares outstanding 45,948,027 37,010,710 45,948,027 Plus: dilutive options - - 2,848,397 -------------------- ------------------- -------------------- Diluted shares outstanding 45,948,027 37,010,710 48,796,424 ==================== =================== ==================== Diluted EPS $ (1.05) $ (0.97) $ 0.28 ==================== =================== ====================
BASED IN VANCOUVER, CANADA, CREO PRODUCTS INC. IS A PUBLICLY HELD HIGH-TECHNOLOGY COMPANY FOCUSED ON THE APPLICATION OF IMAGING AND INFORMATION TECHNOLOGY. THROUGH CREOSCITEX - OUR PRINCIPAL OPERATING DIVISION - WE ARE LEADING THE DIGITAL TRANSFORMATION OF THE GRAPHIC ARTS INDUSTRY. CREO PRODUCTS INC. TRADES UNDER THE SYMBOLS CREO ON NASDAQ AND CRE ON THE TORONTO STOCK EXCHANGE. ADDITIONAL INFORMATION ON CREO MAY BE OBTAINED BY CALLING INVESTOR RELATIONS AT 604-451-2700 OR VISITING HTTP://WWW.CREO.COM OR THROUGH PUBLIC SOURCES, INCLUDING THE COMPANY'S REGULATORY FILINGS IN CANADA AND THE US. Investors will have the opportunity to listen to the analyst conference call scheduled for August 1, 2000 at 4:30pm ET live over the Internet by accessing Investor Broadcast Networks' Vcall website (http://www.vcall.com) through the Creo homepage at HTTP://WWW.CREO.COM or through Streetfusion, located at http://www.streetfusion.com. To listen to the call, please go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a web and phone replay will be available shortly after the call. Web replay will be available at http://www.vcall.com or http://www.streetfusion.com. To access phone replay, available until August 8th, investors (except Toronto area) should dial 1-800-408-3053, access #529620. In the Toronto area, please dial 416-695-5800 to avoid long distance charges. This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the following: (1) The expected advantages for Creo of the transition to an OEM arrangement with Heidelberger Druckmaschinen AG may be less than expected and may adversely affect Creo's operating results and financial performance; (2) the expected cost-savings and synergies from the combination of Creo's business with the Scitex Business cannot be fully realized or take significantly longer to realize than expected; (3) revenues from the Scitex Business are lower than expected or customer attrition and business disruption following the acquisition are greater than expected; (4) the integration of the Scitex Business into Creo's operations is more difficult, time-consuming or expensive than anticipated, or the attrition rate of key employees of the combined business is greater than expected; (5) technological changes or changes in the competitive environment adversely affect the products, market share, revenues or margins of the combined business; or (6) changes in general economic, financial or business conditions adversely affect the combined business or the markets in which it operates. These risks and uncertainties as well as other important matters are described under the caption "Information Regarding Forward-looking Statements" and elsewhere in our Annual Report on Form 20-F for the fiscal year ended September 30, 1999, as filed with the U.S. Securities and Exchange Commission. We do not assume any obligation to update the forward-looking information contained in this press release. Creo, the Creo logo, CreoScitex, Trendsetter, and Prinergy are registered trademarks or trademarks of Creo Products Inc. CREO PRODUCTS INC. Consolidated Statements of Operations and Retained Earnings (In thousands of U.S. dollars except earnings per share)
Three months ended Nine months ended June 30 June 30 2000 1999 2000 1999 (unaudited) (unaudited) (unaudited) (unaudited) - ------------------------------------------------------------------------------------------------- Revenue Product revenue $ 115,338 $ 36,796 $ 212,909 $ 101,690 Service revenue 36,043 7,524 55,877 20,687 Consumables revenue 11,193 - 11,193 - -------------- -------------- -------------- -------------- 162,574 44,320 279,979 122,377 Cost of sales 91,071 23,669 153,115 64,357 -------------- -------------- -------------- -------------- 71,503 20,651 126,864 58,020 -------------- -------------- -------------- -------------- Research and development, net 14,241 4,100 26,601 9,375 Sales and marketing 24,703 7,625 42,982 22,021 General and administration 17,192 2,591 23,582 6,574 Other (income) expense 38 (1,320) (2,076) (727) -------------- -------------- -------------- -------------- Operating income before undernoted items 15,329 7,655 35,775 20,777 Business integration costs 8,172 - 8,172 - Goodwill and other intangible assets amortization 18,124 - 18,124 - -------------- -------------- -------------- -------------- Earnings (loss) before income taxes and equity loss (10,967) 7,655 9,479 20,777 Income tax expense (recovery) (1,723) 2,943 6,367 8,434 Equity loss 967 - 967 - -------------- -------------- -------------- -------------- Net earnings (loss) $ (10,211) $ 4,712 $ 2,145 $ 12,343 ============== ============== ============== ============== Earnings (loss) per common share - Basic, Canadian GAAP $ (0.22) $ 0.17 $ 0.06 $ 0.45 ============== ============== ============== ============== - Basic, U.S. GAAP $ (1.05) $ 0.17 $ (0.97) $ 0.45 ============== ============== ============== ============== - Fully diluted, Canadian GAAP $ (0.22) $ 0.15 $ 0.06 $ 0.41 ============== ============== ============== ============== - Diluted, U.S. GAAP $ (1.05) $ 0.16 $ (0.97) $ 0.43 ============== ============== ============== ============== Retained earnings, beginning of period $ 34,110 $ 10,825 $ 21,754 $ 3,194 Net earnings (loss) (10,211) 4,712 2,145 12,343 -------------- -------------- -------------- -------------- Retained earnings, end of period $ 23,889 $ 15,537 $ 23,899 $ 15,537 ============== ============== ============== ==============
CREO PRODUCTS INC. Pro Forma Summary of Adjusted Operations (In thousands of U.S. dollars except earnings per share) The following pro forma supplemental information excludes the effect of goodwill and other intangible asset amortization, business integration costs and the equity loss from the investment in Japan. This pro forma information is not prepared in accordance with generally accepted accounting principles.
Three months ended June 30 2000 (unaudited) - ---------------------------------------------------------------------------------------------------- Adjusted operating income $ 15,329 Income tax expense (3,832) ------------------ Adjusted net operating income 11,497 Cash tax recovery from the amortization of intellectual property 2,218 ------------------ Adjusted earnings $ 13,715 ================== Basic adjusted earnings per share $ 0.30 ================== Diluted adjusted earnings per share $ 0.28 ==================
CREO PRODUCTS INC. Consolidated Balance Sheets (In thousands of U.S. dollars)
June 30 June 30 2000 1999 (unaudited) (unaudited) - ----------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 61,850 $ 42,621 Accounts receivable 153,335 30,137 Other receivables 53,948 5,270 Inventories 140,533 30,232 Income taxes receivable 4,064 - Future income taxes 18,068 - ---------------- ---------------- 431,798 108,260 Investments and other assets 37,572 - Capital assets 102,911 38,209 Goodwill and other intangible assets 365,600 - ---------------- ---------------- $ 937,881 $ 146,469 ================ ================ LIABILITIES Current liabilities Accounts payable $ 84,177 $ 8,428 Accrued liabilities 89,789 12,612 Income taxes payable - 2,792 Deferred revenue and deposits 51,113 21,321 Current portion of long-term debt - 296 ---------------- ---------------- 225,079 45,449 Long-term debt - 6,438 Future income taxes 25,134 - ---------------- ---------------- 250,213 51,887 SHAREHOLDERS' EQUITY Share capital 661,605 79,045 Contributed surplus 2,164 - Retained earnings 23,899 15,537 ---------------- ---------------- Total shareholders' equity 687,668 94,582 ---------------- ---------------- $ 937,881 $ 146,469 ================ ================
-----END PRIVACY-ENHANCED MESSAGE-----